Public or private railways. The problem of railway management, however, has been a very difficult one in every country. In one sense the railway system would seem to belong to the general system of streets, roads, and highways. The general experience of mankind has shown that streets, roads, and highways should be public rather than private. This has led to the assumption that railways should be treated similarly. There is, however, this important difference. On the streets, roads, and highways private individuals use their own vehicles, travel freely, and go and come when they please. The actual work of transportation, therefore, is not carried on by the public. This method would be impossible on a railway. The trains must run on schedule time and under a well-administered system; otherwise there would be nothing but confusion and inefficiency and multitudinous wrecks. If the public undertakes to own the railways, it would have to go much farther than it does when it owns the streets and highways. It would either have to operate all the vehicles (that is, trains) or lease the road to a single company which would have the exclusive use of the tracks. Obviously even two independent individuals or companies could not operate trains on the same track. There are therefore two analogies which may be drawn between the highway system and the railway system. Since the government owns the highways, one group of people, reasoning by analogy, say that the government ought to own the railways. On the other hand, it is asserted that since private individuals operate the vehicles that are used on the highways, and the government is not in the transportation business at all, a similar rule should prevail with respect to railway transportation; private individuals or companies should do the hauling, and therefore own the railway. In this country we have followed the latter principle, but it has made necessary a considerable regulation of the companies which do the hauling. A third possibility is that the government should build and own the tracks and then lease them to operating companies.

Monopolistic character of a railway. From the very nature of the case a railway must be operated as a monopoly or quasimonoply. As suggested above, it would be impossible for even two companies to run trains on the same track or over the same railway system, unless one became absolutely subject to the administrative rules of the other. This quasi-monopolistic character of the railway has given the management more control over rates than individual draymen, freighters, cabmen, etc. can exercise over freight and passenger rates in the vehicles that are operated on public highways. In order to hold in check this quasi-monopolistic power of the railway, a great deal of legislation has been enacted in this country, beginning with the granger laws of the seventies and eighties of the last century and culminating in the Interstate Commerce Act of 1887 and the subsequent development of the powers of the Interstate Commerce Commission. This commission now has power to prescribe rates and to exercise general control and supervision over the administration of all the railways of the country.

Short- and long-distance hauling. In several countries, such as Germany, Switzerland, Australia, and others, the opposite alternative has been chosen. The government has built and continues to operate the railways. In Germany it was primarily a military enterprise; in order that she might build up her military power and be able to concentrate vast armies and supply them at any point, she needed a well-articulated railway. system. In this respect her policy resembled that of the Romans, who were great road builders in their day. Their system of roads enabled them to march their armies rapidly from one part of the Empire to another, to concentrate wherever concentration was needed, and thus to outmaneuver their enemies.

As to the effects of the two systems on peaceful commerce, there are many different opinions. In some respects freight rates are more favorable in Germany than in the United States ; in others they are much more favorable in the United States. No railway system in the world compares with that of the United

States in the cheapness and swiftness of long-distance freight. Our railways, however, have given comparatively little attention to local freight. In the efficiency and cheapness with which local freight is handled, they are far behind the railroads not only of Germany, where the government owns and operates the roads, but also of England, where they are operated by private companies. The difference is probably not, therefore, to be accounted for on the ground of public or private ownership. In a densely populated country, where the distances are never very great, it would be quite natural that short-distance, or local, freight should form a large part of the business of the railroad; whereas in a country of such vast expanse as ours it would be equally natural that long-distance freight should form the chief part of the railroad business. Each railway system, therefore, tends to specialize in that field where its chief business lies.

Arguments against both sides. No final conclusion is possible as to the relative merits of public and private management. As Sir Roger de Coverley was in the habit of saying, "Much might be said on both sides." Each side has its partisans, and each partisan seems peculiarly unable to appreciate the weaknesses of his own side and the strong points on the opposite side. In reading these arguments one gets the impression that there is very little to be said in favor of either, but much that can be said against both. The arguments against private ownership and operation are based mainly on the monopolistic character of the railroad business, the rapacity of railroad managers, and the general distrust of "big business." The arguments against public ownership and operation are based mainly upon the inefficiency of public business, the danger that politics rather than business needs will determine rates and other details of the business, and the general distrust of the politician.

These considerations might very properly convince one that the same system is not necessarily the best for all countries. In a country which is dominated by autocratic and military standards, where business is contemptuously spoken of as

shopkeeping," where government service attracts a better class of men than business attracts, and where men are chosen for high positions not because of their talkativeness or popularity, but because of their knowledge and efficiency, the objections to public ownership and operation are weak and those against private ownership and operation are weighty. In a country, however, which is dominated by democratic ideals, where business and all honest occupations have always been regarded as just as honorable as government or military service, where, on the whole, business attracts a better class of men than politics, and where men are chosen for high public positions mainly on the ground of their ability to make stump speeches rather than on the ground of their knowledge and efficiency, the objections to government ownership and operation are very strong, and those against private ownership and operation are relatively weak. There is a strong probability, however, that the persuasive talkers will be able to enlarge their powers, at the expense of the efficient doers, by persuading the voters to intrust more and more power to them, the talkers.

CHAPTER XX

MERCHANDISING

Personal utility. In a previous chapter it was pointed out that three kinds of utility are produced by human industry, form utility, place utility, and time utility. It would be possible, if one cared to draw somewhat finer distinctions, to speak of personal utility as a special phase of place utility; or, on the other hand, personal utility could be named as a fourth kind. When an object is transferred from a person who has no use for it to a person who has a use for it, its utility, or power to satisfy desires, is increased by the transfer, just as truly as though it were transferred from a locality where it is not needed to a locality where it is needed.

There is an ancient fallacy to the effect that someone must gain and someone must lose in every trade. This fallacy has been exploded so often that it hardly seems necessary to repeat the process here. Two farmers may trade horses and both gain. A wool grower who has a surplus of wool and a shoemaker who has a surplus of shoes may exchange products to the advantage of both. A boy who has a surplus of marbles but a deficit of taffy might advantageously exchange some of his surplus marbles for taffy, carrying on the exchange with another boy who had a surplus of taffy but a deficit of marbles. By this process the personal utility of both marbles and taffy would be increased.

Merchandising may be productive of utility. If it is agreed that the power of goods to satisfy wants is increased when those goods get into the possession of the people who really need them, it ought not to be difficult to see that the individual